MPs are likely to debate the Government's retrospective hike in the cost of loans for more than two million students after a petition quoting MoneySavingExpert on the subject collected more than 100,000 signatures.
The petition by Alex True, a 22-year-old engineering student at Durham University, hit the target within just three days. This means it'll now be considered for debate in Parliament. At the time of writing more than 120,000 people have now added their name.
Parliamentary petitions which reach 100,000 signatures are highly likely to be debated – though technically they need to receive the backing of the Petitions Committee, which is made up of 11 backbench MPs from different parties.
Martin Lewis, founder of MoneySavingExpert.com and former head of the Independent Taskforce on Student Finance Information, has been fiercely campaigning on this issue since a consultation on it first opened in July 2015 – meeting ministers, organising letter-writing and even hiring lawyers to investigate a legal challenge.
The issue relates to a Government U-turn on a previous promise to increase the threshold at which first-time undergraduates in England who started university in September 2012 and beyond repay student loans (see below for a full explanation).
Get Our Free Money Tips Email!
'Real concern among students and parents'
Martin says: "This change by the Government is a disgrace. It goes against all forms of natural justice. If a commercial company had made retrospective changes to what they'd promised about their loans, they'd be slapped hard by the regulator – the Government shouldn't be allowed to get away with it either.
"Not only does it betray the current generation of students, it also fundamentally risks destroying any trust future students can have in the system. How can we ask young people to sign up to a deal for 30 years with the risk it could be changed again at a minister's whim – without any legislation? We need the terms to be locked into statute.
"However, bravo Alex True, it's fantastic that this petition's numbers exploded so quickly to force a parliamentary debate. It shows there's real concern among students and parents. Having said that, I have already engaged lawyers, written to the Prime Minister and met with Jo Johnson, Minister of State for Universities and Science – and at every stage the Government has pig-headedly refused to budge even a fraction. My concern is even after a parliamentary debate they'll put their fingers back in their ears."
What does the petition say?
The full text of the petition, which is titled 'Stop retrospective changes to the student loans agreement', reads as follows: "In 2010, the Government promised that from April 2017 the student loans repayment threshold of £21,000 would be upped each year with average earnings.
"The Government has now backtracked on this promise, freezing the threshold at £21,000. Graduates will now pay more on their student loans.
"According to MoneySavingExpert two million graduates will end up paying £306 more each year by 2020-21 if they earn over £21,000. By introducing retrospective changes it threatens any trust had in the student finance system.
"A commercial company would not be permitted to alter the terms of a loan agreement, so why should our Government? The chancellor did not even mention these changes in his Autumn statement, underlining the underhand nature of these changes."
Here are the key facts on the issue:
1. The Government told potential students it would increase the threshold. First-time undergraduates in England who started university in September 2012 and beyond repay student loans at a rate of 9% of everything earned above £21,000 a year after they leave. In 2010, when it launched the new system, the Government promised that from April 2017 this £21,000 threshold would rise annually with average earnings.
2. Last October the Government reversed that, freezing the threshold until at least 2021. So instead of the threshold going up each year, it'll be stuck at £21,000. This will leave more than two million graduates paying £306 more each year by 2020/21 if they earn over £21,000.
3. The Government consulted on it and 84% of responses were against freezing the threshold. Only 5% were in favour, yet it went ahead anyway.
4. Freezing the threshold means many students pay more. A simple example to explain: if you earn £23,000 and the threshold had increased to £23,000, you'd have repaid nothing, yet as it's stuck at £21,000 you repay £180 a year.
5. While it'll add to the cost for lower and middle earners, higher earners gain from this. As most students won't repay in full within the 30 years before the loan wipes, it means this is simply a cost increase of possibly £1,000s, but no gain. However, for the highest-earning graduates, those who will clear the loan within the 30 years, the fact they'll repay more means they pay less interest and in total it saves them money. Thus this is a regressive change.
6. This is a retrospective change – even those who've already graduated pay more. Quite simply students signed up to one deal and have been given another that's worse for the vast majority of them.